What If Our Home Doesn’t Sell? Should We Turn It Into A Rental?

When I originally wrote this article, we had no offers on our home and we were feeling somewhat negative about it. However, last week we accepted an offer on our home and it's scheduled to (hopefully) close in July.

Our home is priced quite competitively and below comparables, so we are afraid to lower the price any further.

We are already going to lose money with what our home is priced at now so we are currently wondering about other possible options. I knew selling a home would be stressful, but I didn't realize that it would be this stressful. Many ideas have been going through my mind but it's hard to decide what the best decision is.

Below are some of the things we have been thinking about possibly doing since our house hasn't sold yet.

Make a temporary decision.

There are many decisions we could make just for the time being.

We could take our home off the market temporarily to see if our neighborhood experiences a rebound. Temporarily doing this could be risky though as our neighborhood could lose value over time instead of gaining value.

However, there is a chance that our neighborhood could go up, which would mean that we might not lose as much money if we were to rent it out while we waiting for it to rebound.

Move back home.

Of course, one of our options is just to move back home since our house hasn't sold yet. Right now we are just renting in Colorado, so we do have the option to move back home at the end of our lease.

This isn't the ideal situation as we didn't move ALL the way out here just to move back to St. Louis one year later. However, this is most likely our best choice as well as the most realistic one if it doesn't sell.

Moving back home would also get rid of a lot of the worries that go along with the options below.

Rent our home to long-term renters.

We are debating renting out our home on a long-term basis. We could most likely find long-term renters somewhat easily and I definitely think we could charge more than our mortgage payment each month.

We wouldn't get rich from renting it out to long-term renters, but it could be enough to cover our mortgage and possibly one day even pay it off and keep it as a rental forever. There also wouldn't be a ton of work involved, at least not when compared to renting it out to short-term renters.

The major downsides of renting out our home on a long-term basis would be if we had bad renters and the fact that we would be long distance landlords. We might need a property management company and if we did that then the revenue from the monthly rent would be much lower.

Rent our home to short-term renters.

On the other hand, we could also think about renting out our home on a short-term basis on a website such as Airbnb, VRBO, or Homeaway. This would also allow us to have a place to come back to, which would be very nice.

The major downside to doing this is that we are so far away and it would be hard to manage something like this from states away. This is because someone would have to clean up after each stay, restock items such as toilet paper, and so on. I've also searched and there are no companies in our area that offer property management for vacation rentals either.

Drop the price significantly.

We originally priced the home below what we bought it for back in 2009, and we've dropped it since it's been listed as well.

The last and least fun option would be to just drop the price until someone bites, but that would mean losing a significant amount of money.

However, the plus side would mean that the house would hopefully sell quicker. This is not an option I would ever want to take but it does exist…

Have you sold a house before? Did you ever feel panicky about whether it would sell or not? What would you do if there were no offers on a home you had for sale?

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I’m so glad you received an offer and you’re accepting it. 🙂 We had our place on the market for three months and received one lowball offer ($150k on a $180k house). We didn’t accept and went the rental way – which kind of sucks crap happens. We’ve been renting for nearly two years and are only a 5 hr drive away, and while I like knowing we still have the property and are gaining equity, it is definitely not ideal.

Hopefully the contract goes through Michelle. I think a bakery near my place followed every step. The owners finally dropped their price of the business from 300k to 100k equipment and original recipes included. One of the owner’s wife will stay behind working for the new owner until she believes he or she is trained to run the business the way it has ran for 75 years from the owner’s father and the two brothers. Reason for sale was the declining health issues of the brothers. Since they lowered thief listing price they had 12 offers but under a contract. Out of curiosity, what do you think the odd of the contract not being successful? Knowing properties a potential would need 20% down to eliminate the mortgage insurance. How bout a business? I just recently heard about self-financing after being offered a few startup rental properties but want to know your thoughts about how it can and cannot benefit the contract agreement.

My wife and I will keep hoping the best for you as well. This blog keeps getting interesting each time I see a new post due the relevance in my financial situation! I haven’t actually started a blog but was able to take in some information from this blog to negotiate lower offers for a startup rental property business. I am glad to join and subscribed months ago. It’s like we’re not alone for financial independence. ^_^

Great news that you got an offer, and my fingers are crossed that the closing goes smoothly! If something were to happen, my vote would be to try to do a long-term rental. It sounds like you’re happy in your new home, so moving back to live in your old house would be such a disappointment.

We went through this a few years ago. We had to sell our house in Minneapolis after we relocated to Atlanta. It was very stressful, but in the end it was totally the right choice. It also gave us lots of valuable onsite for the next time we buy and sell!

Selling houses can be stressful! Congrats on your offer. We sold a house in north St. Louis County in 2008, before the bottom fell out of housing prices. We ended up making a ton of money on that house. The downside to that is that we bought our next house in 2008 and the value of the home that we purchased fell so significantly that the money we made on the sale is a wash in the end. It is great that you are able to move on without the ties to the house.

Haven’t sold yet, only bought. But my mother had a similar situation when she retired and moved. It took almost a year for her place to sell, but in the meantime she had renters on a month to month with reduced rent to compensate for the intrusion of viewings.

Personally, I’d go the long term renters / property manager approach. If you can cover the expenses, enjoy the equity and eventually it will be mortgage free and a source of retirement income.

I’m glad to hear you got an offer on the house! I was in the same boat, trying to figure out what to do if it didn’t sell. I didn’t have a ton of wiggle room on price; I’m still in debt-payoff mode, so my cash position isn’t that strong. It was such a relief when we finally closed, and I could walk away free and clear!

As much as I hate the idea of being a landlord, I would consider renting my home if I absolutely had to. I would hire a good company to screen all the potential renters, do a background and credit check and then have someone manage the issues. That’s the only way I’d do it.

We had our house on the market for more than 2 years before finally deciding to rent it out. We had lowered the price several times and while it was showing, and we even had interested lookers, no one could get a loan (post-Hurricane Katrina market). We had to rent it or let it go into foreclosure because we had exhausted all savings trying to pay our mortgage there and our rent in our new town (we didn’t have the option to move back – my husband no longer would’ve had a job option there). We chose to rent instead of ruining our credit! Our first set of renters were a nightmare, but after evicting them, the second family we got as renters have been a dream. They’ve been in the house for almost 3 years and we’ve had no trouble with them! It wasn’t my first choice and I’d still rather have it sold, but having good renters and having the mortgage paid is certainly better than the alternative.

We had a similar situation where we needed the house to sell as fast as possible since we were moving internationally. Turns out we found a great buyer at the last minute… I’m glad I didn’t have to go through all the other possible options (none of them were really great for us), and glad it ended up well for you too!

We were lucky and able to sell our home right away, our neighbor bought it. We have made some drastic changes in our life in order to enjoy more. Thank you for all your advice, I have since started my own blog and would love to have you and anyone else check it out.

I have some very good friends who are right in the middle of trying to sell their houses. It sounds so stressful. This list is really good food for thought. We will face this someday, too, so thank you for sharing the info.

Only you know if you are cut out to be a landlord, and a absentee one at that. I’ve gone the landlord route and hated it, so being so far away would have been even worse for me. Of course, there are property management firms out there, but it is taking a leap of faith trusting them as well. For me, I’d probably take a lower offer or try to negotiate it to somewhere in the middle. Or if you could move back home without hurting your career that might be the way to go.

I hated being a landlord because I had terrible renters. It was a nightmare and the sad things is the property management company was shady and kept overcharging for things. If you have good renters and a good property management company you are golden, but you don’t know that right away. Also, if you have disposable income for when things go wrong. Not ideal though!!

The one and only time I’ve sold a house, it was when the bubble really started to grow. I needed to sell it quickly, so I probably underpriced it a bit. On the first weekend, I got two bids and was able to nudge one up a bit.

In other words, I was very lucky. Enjoy the relief of having a bid. There’s still rigamarole obviously, but the most harrying part is over now.

I’m so glad things have worked out for you! And I hope this article is a sign from the good Lord that things will work out for us.

We listed our home at the end of May. It’s almost 4 weeks later and we have only had 2 showings, no offers. The feedback has basically been “nice home, not for us”. We had an open house on Sunday with about 5 people stopping through, who all seemed to like the home. No bites. I watch the views daily on Zillow, and check to see if anyone new has favorited our home.

And with great disappointment, and a major move looming next month, we dropped the price yesterday. It’s now listed for less than we paid. We have looked at renting, but there are no property management companies here, either. I am about to approach some friends to operate as pseudo property managers and just hope… and do lots of praying.

We are also considering renting out a house. We are looking to move cities but are not ready to go yet. However, we’ve decided that if we find the perfect house in the new city, we’ll buy it and rent it out. This stresses me out a bit (would it be difficult to rent a house when you’re in a different city? what if we can’t find a suitable renter?). But it sounds like you should be in a good position. Goodluck with the closing!

The decision to rent a home is such a tough choice to make. But if you end up deciding to rent, one great positive is that it will give you the opportunity to learn about that channel of passive income. Who knows? Maybe it will turn out to be a profitable endeavor and you’ll find more opportunities in real estate.

Eeeek! This would be horrible. I haven’t owned a house before and can’t imagine this situation honestly. I think I would rather get rid of the headache and sell lower than keep a house I didn’t want – just as a general matter.

Fingers crossed that your current offer goes well. The home inspection will be key. You’ll find out if your potential buyers are reasonable people or not. If they’re unreasonable you can often still work it out but it’s a pain.

Some thoughts about your options in the post.

“Make a temporary decision” According to a Zillow graph I found, St. Louis as a whole hasn’t seen any home price appreciation for the last couple of years so for planning purposes, I would pencil in little or no expected appreciation. http://www.zillow.com/saint-louis-mo/home-values/

“Rent our home to long-term renters” AKA “Accidental Landlord.” Unless you expect decent appreciation soon, you would want to make absolutely sure the house is likely to at least break even as a rental when you include ALL likely expenses. Ballpark: ~10% to property manager, ~10% vacancy rate (might go unrented for a month between when one renter leaves and the next renter starts) ~5% for maintenance, property taxes, insurance, condo/HOA fees if any, etc. The key is to know all the expenses beforehand so you don’t accidently lock-in a loss every month. It’s killer emotionally.

“Rent our home to short-term renters” This might be a good option if you live in a touristy area, otherwise, it’s probably not ideal.

“Drop the price significantly” A house has a fair market value. It doesn’t matter what you paid, it could be worth a lot more or a lot less than what you paid. If you can swing it without doing a short sale, you can lower the price until you find the highest price at which it will sell.

Of course, if you could make money on it as a rental, including your time managing it, that would change the calculations. Or if you wanted to make rentals an important part of your portfolio and this is just the first one, then that would change the calculations.

But as a general rule of thumb, accidental rentals drive accidental landlords crazy.

Congratulations on getting an offer! I think the two most stressful times in my life were buying my first house and then selling it. As far as renting it out, I have heard some horror stories from friends who rented their house long distance. Sometimes, no matter how thorough your background check goes, you just might get a bad tenant. Good luck on the closing and I hope you keep us updated!

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Hello and welcome!My name is Michelle and I'm the author/owner of Making Sense of Cents. Learning how to save money and make more money changed my life. It allowed me to pay off $40,000 in student loans, start my own business, and I now travel full-time.